Where next for stocks?

Despite the rash of investor optimism and the healthy-looking uptick in markets, there is plenty of evidence to suggest that we're still mired in a primary bear market. So should you be buying shares now?

Two weeks ago we explained that FTSE's price action had created a range between the levels of 4150 and 3850, we said that a break above 4150 would suggest a return to strength or, on weakness below 3850, confirmation of a short-term top of considerable importance. The break was to the upside, following which there has been further strength. We must now try to work out what is likely to happen next, what action we should take and very specifically, do we believe that the economies of the developed world are set to recover and the bear market is over. Are we now at the beginning of a new equity bull market?

The first point of reference is to look at historic examples; in particular, the American stock market post 1929 and the Japanese stock market post 1990.

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